Ruban Selvanayagam
Developer

Introduced in March 2008, the grant making programme was launched by former President Lula da Silva as a means of significantly reducing the country’s housing deficit as well as enabling the lower to middle income brackets to get on the ladder.

 

In reality, however, housing executives are experiencing several bureaucracy related problems particularly with regards to getting loans released.  By the close of quarter three 2010, state bank and administrators of the programme Caixa Econômica Federal had approved approximately 275,000 units – whereas double the amount of engagement requests had been received.  Perhaps of more concern was the fact that only 3,600 units were delivered up until August – one and half years after the initiation of the programme.  

 

Whilst it was announced in December that there had been a rapid increase in the number of contracts being awarded, a number of construction companies have stated their intention to move away from being involved in the programme.  According to Eduardo Gorayeb, president of the Rodobens construction company in an interview with the Examen magazine: “the speed of doing business that we are accustomed to is different to that of the public powers.”  

 

Many of the Brazil’s constructors have also developed a growing reluctance to engage in the programme due to lower profitability levels – an issue that has been exacerbated by the rising construction costs witnessed throughout the country.  The Jotanunes company from Sergipe, for example; with revenue levels reaching R$ 200 million between 2009-10 (growing 180 percent for the last 2 years); were formerly very active in the lower income market but stated recently that they will move into the Class C bracket stating in an interview with Examen magazine: “today, to touch a low income project we have to consider twice, maybe three times.  The risk is far greater and, as a company, we do not want to tread this fine line.”